ASSISTANT COMMISSIONER OF INCOME-TAX, PUNE vs. M/S. NALCO WATER INDIA LTD., PUNE

ITA 1219/PUN/2017Status: DisposedITAT Pune30 September 2021AY 2010-115 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the services received by the assessee were in the nature of intra-group services and not stewardship activity, following its decision for the preceding assessment year. The appeal was dismissed as the Revenue only challenged the nature of services, not the ALP determination.

What were the facts?

The assessee reported international transactions for Headquarter and Management Assistance services. The TPO held these services to be stewardship activities, proposing a transfer pricing adjustment. The CIT(A) deleted the addition, classifying them as intra-group services.

What were the issues?

The key issue was whether the services received from group entities constituted intra-group services or stewardship activities for transfer pricing purposes.

Which sections of the Income-tax Act were involved?

Not explicitly mentioned in the provided text, but the context relates to transfer pricing provisions.

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH, ‘C’ PUNE

Before: SHRI R.S. SYAL & SHRI S.S. VISWANETHRA RAVI

For Appellant: Shri Ketan Ved

For Respondent: Shri Jagdish P. Chandraker

This appeal by the Revenue is directed against the order passed by the CIT(A) on 08-02-2017 in relation to the assessment year 2010-11.

The only ground effective raised by the Revenue in the appeal is as under :

“On the facts and circumstances of the case, the CIT(A) has erred in holding that intra groups activities performed by Nalco US under SA and by Nalco Pacific under the RMASA constitute intra group services and the said activities are not in the nature of stewardship activity”.

Briefly stated, the facts of the case are that the assessee filed its return declaring total income of Rs.9,78,44,129/-. The international transactions of receipt of Headquarter services from Nalco, USA and Management Assistance services from Nalco Pacific Pte Ltd., Singapore totaling worth Rs.17,21,93,000/- were reported. The Assessing Officer (AO) made a reference to the Transfer Pricing Officer (TPO) for determining the Arm’s Length Price (ALP) of the international transactions. The TPO took note of the relevant clauses of the agreements entered into by the assessee with Nalco, USA and Nalco Pacific Pte Ltd., Singapore. After considering entire gamut of the relevant facts, the TPO held that the services availed by the assessee were in the nature of stewardship activity and not intra group services. This is how, he determined Nil ALP of the international transactions and proposed transfer pricing adjustment of Rs.17,21,93,000/-. The AO made such an addition. The ld. CIT(A) deleted the addition by holding that the services availed by the assessee were in the nature of intra group services and not stewardship activity. He further held the international transaction to be at ALP, resulting into the deletion of the addition. Aggrieved thereby, the Revenue has come up in appeal before the Tribunal in the terms indicated above.

We have heard the rival submissions and gone through the relevant material on record. It is common submission by both the sides that the issue raised in this appeal is similar to the one raised in the Revenue’s appeal for the immediately preceding assessment year, 2009-10. Except for increase in mark-up rate under the two agreements, both the sides fairly conceded, that nature of the services is unchanged. The appeal for the assessment year 2009-10 was fixed simultaneously with the extant appeal. During the course of hearing of the appeal for the immediately preceding year, both the sides made elaborate submissions. In fact, the parties adopted their submissions made for the earlier year insofar as the instant appeal is concerned.

This shows that the nature of services availed by the assessee from Nalco, USA and Nalco Pacific Pte Ltd., Singapore is similar to that of the preceding assessment year. We have passed separate order for the assessment year 2009-10 approving the view taken by the ld. CIT(A) to the effect that the services received by the assessee were in the nature of intra group services and not stewardship activity. Since the dispute in the instant appeal, as appearing from the ground extracted above, is only on the nature of the services, following our view taken for the immediately preceding year, we countenance the impugned order on this score.

It is made clear that the Revenue has challenged only the ascertainment of the nature of services by the ld. first appellate authority and not the ALP determination of the international transaction by the ld. CIT(A).

In the result, the appeal is dismissed. Order pronounced in the Open Court on 30th September, 2021.

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